The market sentiment tremendously improved by the end of the week. The S&P 500 broad market index after plummeting to the bottom at 4270-4280 points managed to jump back almost to 4335 points.
The unthinkable threat of the default of the United States was waved away from the market as Democrats and Republicans came to a temporary agreement to lift the debt ceiling by $480 billion that would allow the U.S. Treasury to cover its debt by early December. This news was a primary trigger for the stock market to recover since the mid of this week.
Investors are now looking at the Federal Reserve’s (Fed) monetary policy that is now primarily defined by the U.S. labour market. The Fed Chairman Jerome Powell has clearly stated that the monetary policymaker would start the tapering of its massive monthly $120 billion bond-buying program in November if the Non-Farm Payrolls report before then is in line with or better than forecasts . And this is a crucial note that may ease the reaction of investors in case of moderately positive data that is in line or even slightly below forecasted figures and amplify the reaction in case of strong indications.
Consensus figures suggest that Non-Farm Payrolls will rise by 500,000 in September, the decline of unemployment to 5.1% from 5.2%, and rising hourly earnings by 4.6% year-on-year from 4.3% in August.
The Fed may consider such a report as a decent one that meets criteria to start discussions over tapering in November. In case the data is close to the forecast, we may expect stock markets to resume a decline. And the crucial level for such a trend would be formed if S&P 500 index stays below 4435 points by the end of Friday, opening the way to a possible decline to 4000-4100 in the next week. If the index climbs to 4475 points, the upside scenario would become a primary one.
Crude market is suffering high volatility with a rapid change of technical patterns. Appealingly, Brent crude prices would remain in the area of $79.0-84.0 per barrel if new factors would not appear to break this area.
Gold prices seem to be in equilibrium around $1750 per troy ounce with the Mid-term target at $1700 per ounce. However, depending on incoming labour data on Friday, gold prices may test the $1770-1800 area in case of a weak report.
The FX market has a more complex picture as the EURUSD is close to the lowest weekly support level at 1.14800-1.15000, where the pair may reverse to the 1.15700. But if the pair remains below this level it may be further pressured towards the 1.14800-1.15000 area.
The GBDUSD is much more univocal as it is “charged” for the rise towards 1.37000-1.38000.